Pacific Sunwear files for bankruptcy protection

Struggling teen apparel retailer Pacific Sunwear of California filed for Chapter 11 bankruptcy protection on Thursday, succumbing to mounting losses and intense competition in the industry.

Private investment firm Golden Gate, which plans to take PacSun private after it emerges from bankruptcy, will convert more than 65 percent of its debt into equity and provide a minimum of $20 million in additional capital, the company said Thursday.

Golden Gate had lent PacSun about $60 million in 2011.

The Anaheim, California-based retailer listed assets in the range of $50 million to $100 million, and liabilities of between $100 million and $500 million, according to a court filing.

PacSun listed sportswear maker Nike and mall operator Simon Property Group among its top creditors, to which it owes $5.7 million and $3.8 million, respectively.

The company also said it had a debtor-in-possession credit agreement of $100 million with Wells Fargo Bank.

PacSun's top investors include investment firm GI2 Ltd, which owns a 28.6 percent stake, and Adage Capital Management LP with a 14.1 percent stake.

PacSun said it would continue to operate all of its 600 stores and does not expect the bankruptcy filing to have an immediate impact on employees. In Iowa, PacSun has stores in Davenport, Dubuque, Sioux City, Waterloo and West Des Moines.

PacSun, which retails the Kendall and Kylie Jenner clothing line, has been able to report a profit only once in the past six quarters as intense competition from fast-fashion retailers and online rivals has led to slower sales growth.

Rival Aeropostale said in March it was exploring strategic alternatives, including a sale.

PacSun said fourth-quarter sales rose 0.5 percent to $232.9 million.

The stock had fallen 96.6 percent in the past 12 months as of Wednesday's close.